Complex Tax Research Articles

The Profitability of Businesses Owned by Nigerian Female Entrepreneurs: A Qualitative Analysis

This paper aim to assess the profitability of businesses owned by Nigerian female entrepreneurs. Assessing the past and current profitability, as well as projecting future profitability is imperative in the study of the post start-up phase of businesses. The paper adopts qualitative approach in order to assess the profitability of businesses owned by the female entrepreneurs. Interview was selected to serve as a research instrument in this study. The data collected were analysed using a thematic method. The paper found that female entrepreneurs express concern about poor tax administration and excessively complex tax regulations. The paper recommends a need to consider single taxes for small and medium scale businesses as a solution to reducing the incidence of paying multiple tax.

Swiss Tax Aspects of Debt Financing: A Guide on Contractual Arrangements Required to Mitigate Swiss Interest Withholding Tax and Their Practical Implications

Switzerland is one of the few European countries to apply a strict set of complex tax rules to debt financing which may even apply if a debt instrument is issued by a non-Swiss issuer. For corporate and banking lawyers involved in debt financing transactions with a nexus to Switzerland, dealing with Swiss withholding tax rules as well as the corresponding language in the loan documentation and agreements is inevitable. This article focuses on providing an overview to non-tax focused lawyers in order to facilitate the understanding of the Swiss interest withholding tax system applicable to debt financings and to raise awareness of recent changes in practice introducing more relaxed safe harbours. debt financing, Swiss withholding tax reform, tax law

Contribution and Distribution Flexibility and Tax Pass-Through Entities

The way jurisdictions design their tax systems for business operations can be a contentious issue, as they try to balance the competing goals of raising sufficient tax revenue without unduly inhibiting commercial investment and activities. Such tax design can be of particular importance for small and medium enterprises, which due to their size, inherent characteristics, and resources can struggle with tax compliance. Those attributes can also make business tax regressive. A number of countries around the world have adopted business entities that utilise corporate characteristics, such as liability protection for members and separate legal entity status, but have the characteristic of tax pass-through, with members assessed directly on the income and losses of the entity. Examples include limited liability partnerships (LLPs) in the United Kingdom, look-through companies in New Zealand, and limited liability companies (LLCs) in the United States.In some jurisdictions, these tax pass-through entities have been extremely popular, which in part has been attributed to flexibility for the members in terms of governance and the facilitation of contributions and subsequent distributions. This flexibility is arguably a desired commercial feature of business entities. However, such flexibility with contributions and distributions is seen as a potential risk to tax revenue as there is concern with artificial engineering in order to lower the overall tax burden. This has led to tax integrity measures, which by their very nature can potentially restrict flexibility.For example, LLCs and their members are subject to greater (and potentially more complex rules) when it comes to measuring the cost basis of their membership interests; this then influences members’ ability to utilise allocated losses and the tax treatment of distributions. The flexibility of contributions and distributions for LLPs in the United Kingdom has also raised concerns with the introduction of tax integrity measures. By comparison, the United States’ older tax pass-through entity, the S Corporation, with only one class of membership interest, has fewer integrity rules governing allocations.This Article will critically assess how the flexibility of contributions and distributions by these tax pass-throug entities affects the tax rules that apply to their members. We argue that the flexibility of contributions and distributions appears to be a key characteristic demanded by business entities both for commercial and tax reasons. However, investors need to be cognitive of the inherent complexity and costs that this flexibility may entail. Additionally, it is important for governments and revenue authorities not to unduly restrict flexibility with complex tax integrity rules as it is a fine balance between commercialand revenue needs.

Lessons From the Open Library of Humanities

The Open Library of Humanities was launched almost half a decade ago with funding from the Andrew W. Mellon Foundation. In this article, we outline the problems we set out to address and the lessons we learned. Specifically, we note that, as we hypothesized, academic libraries are not necessarily classical economic actors; that implementing consortial funding models requires much marketing labour; that there are substantial governance and administrative overheads in our model; that there are complex tax and VAT considerations for consortial arrangements; and that diverse revenue sources remain critical to our success.

Do People Really Want a Simple Tax System? Evidence on Preferences Towards Income Tax Simplification

Using new survey and experimental data for a representative sample of the German population, we study preferences for tax simplification. The general wisdom seems to suggest that most tax systems are overly complex and that tax simplification is generally desirable. Consistent with this general wisdom, we find that more than 90% of our sample believe that the tax system needs to be simplified. However, there also are efficiency and equity arguments in support of a certain degree of tax complexity and it is puzzling why tax systems remain highly complex despite the conventional view in favor of more simplification. The main purpose of our study then is to investigate if the high support for tax simplification is driven by a lack of awareness about the trade-offs behind simple and complex tax systems. Our data show that the support for simplification decreases as we randomly provide economic arguments against simplification and as we ask respondents if the tax system should account for specific differences in living situations (such as costly care of elderly family members). Overall, our findings suggest that the high support for simpler taxes is to some extent driven by a lack of awareness about the implications of tax simplification.

Corruption and Tax Structure in American States

We examine the extent to which public corruption influences the tax structure of American states. After controlling for other tax structure influences, we find that states with greater measured public corruption have more complex tax systems, have higher tax burdens, rely more heavily on regressive indirect taxes, and have smaller shares of their tax burdens with initial impact on business.These are significant structural impacts on the tax systems.

Developments in Germany concerning the Taxation of Trusts

Abstract Based on recent court decisions and rulings from the German revenue services, the article highlights the current developments in Germany regarding trusts. The number of court cases and revenue rulings dealing with trusts has substantially increased in the last two years. Nevertheless, they show that using trusts for wealth planning raises complicated and complex tax questions for German-based beneficiaries.

New Canada Pension Plan Enhancements: What Will They Mean for Canadian Seniors?

How much of the enhanced Canada Pension Plan (CPP) benefit will make its way into the pockets of Canadian seniors, after it filters through Canada’s complex tax and social benefit system as income? How much will it help Canadians to maintain their living standards in retirement? To answer these and other questions, this study builds on Statistics Canada’s LifePaths dynamic microsimulation model of the Canadian population to project the implications of the CPP enhancements at full maturity (years 2070–2074). The enhancements will on average increase CPP benefits by 44 per cent across Canadian seniors. For every dollar of new CPP benefits a worker earns, approximately 62 cents will make it into their pocket. This proportion is reasonably consistent across Canadians with different lifetime earnings levels, but the dynamics vary greatly as larger CPP benefits are offset by diverse combinations of higher taxes and reduced payments from Old Age Security and Guaranteed Income Supplement. The enhancements will improve the retirement income adequacy of Canadians, particularly the third of the population without significant workplace pensions in retirement, helping an additional 12 per cent of this group to maintain their living standards in retirement.

Risk Screening of Tax Compliance of Manufacturing Listed Companies Based on Association Rules

With the increasing variety of taxes and corresponding tax laws and regulations, the complexity of tax collection and management is increasing, and listed manufacturing companies are one of the important sources of tax revenue in China. Therefore, it is of great significance to construct a scientific and effective tax risk identification and assessment system. In order to improve tax compliance under the premise of complex tax work, this paper proposes a method of tax compliance risk screening for listed manufacturing companies based on association rules. The financial index data of listed manufacturing companies that are crawled are processed, and the Apriori association rule analysis is used to realize the analysis and mining that have an impact on corporate tax compliance. By dividing the tax compliance risk levels of enterprises, it is concluded that the common characteristics of enterprises with low tax compliance are weak profitability, poor debt paying ability, and a large number of overdue repayment.

Overview of the Recent Changes of the Polish Tax Rules and Support for Taxpayer

Abstract The objective of the paper is to present the significance of general rules of tax law resulting from the new draft tax ordinance for the taxpayer’s situation. The aim of this paper is to present a general overview of the newly introduced rules of tax law. This study may be the basis for further studies in the field of subject principles. The analysis covered the rules referring to: support of the taxpayer in fulfilling tax obligations, actions of tax authorities in a way that inspires taxpayer’s trust, equal treatment of taxpayers, presumption of the taxpayer’s honesty, not abandoning the established practice of resolving cases in the same factual and legal state. Within the framework of this paper, research hypotheses concerning the impact of these rules on the legal situation of the taxpayer have been positively verified. These rules will have an impact on the improvement of the taxpayer’s situation, which has to face the complicated legal environment. This environment forms the complex tax law system, as well as the intricate and complicated language used by the legislator in making tax law regulations in Poland. This confirms the need to introduce changes resulting from the new draft tax ordinance.

PAJAK TEMBAKAU: PERMASALAHAN PRODUKSI ROKOK ILEGAL DI INDONESIA

Tax which can influencea country’s economy and society’s prosperity, namely through increasing health and revenue objectives (UN 2018 p. 40), such as tobacco tax. In Indonesia, the revenue from tobacco tax had been increasing from 2007 to 2018. This paper argues that Indonesia should tax the informal tobacco firms based several strategies. The contributors of Indonesian illicit cigarettes are 90 percent from domestic industries and 10 percent from oversea industries. The possible factors which cause the illicit cigarettes are Indonesian complex tax structure and negative behaviour of cigarettes firms. To solve the issues, the Indonesian government should conduct several strategies. First, analysing cost and benefit of taxing the informal sectors. Second, after deciding to tax the informal sectors, five tax reforms policies should be implemented by the Indonesian government, namely the capability of the revenue administration, the pragmatic approach, technical approach, firms’ incentive approach, and political and administrative incentive approaches.
 Key words: Tobacco tax, Informal Sector, National Revenue

TAX INSTRUMENT OF FISCAL POLICY UNDER CONDITIONS OF DIGITALIZATION OF FISCAL SPACE

Introduction. Nowadays information technologies and digital assets came into our lives, generating risks and potential threats to society. A structure of rational fiscal policy in such risks and threats is a key issue for the current policy of the country. Purpose. The purpose of the article is to study methodological approaches to understand the essence and nature of the taxation of individual incomes under the conditions of an innovative digital trend in society, which can be used to implement a fair fiscal policy in Ukraine. Methods. The author used scientific methods such as historical, abstraction, deduction, comparison, analysis, systematization and others. Results. It was established that digitalization processes, on the one hand, can stimulate avoidance and tax evasion, and, on the other hand, can increase the effectiveness of fiscal policy. Digital technologies weaken informational limitations in the implementation of tax control to identify the present economic results of taxpayers, and also allow to implement a complex tax system at lower costs. Conclusions. The fairness of taxation in digitalized fiscal policy and space should be based on ensuring a relatively equal environment for individuals as a result of the comprehensive taxation of various types of individual income - labor, capital and inheritance. Despite this, the use of an information resource in fiscal policy will help to achieve a balance between efficiency and fairness of taxation.

ANÁLISE CRÍTICA SOBRE O DESEQUILÍBRIO FINANCEIRO DOS MUNICÍPIOS NO MODELO DE FEDERALISMO FISCAL BRASILEIRO

O presente artigo aborda o desequilíbrio financeiro dos municípios no modelo de federalismo fiscal brasileiro. Objetiva-se demonstrar que o modelo atual não contribui o quanto poderia para a redução das desigualdades econômicas regionais. Será pesquisado qual o papel do federalismo cooperativo dentro da sistemática delineada pelo texto constitucional. A partir das normas que regulamentam o tema, procurar-se-á compreender como tem funcionado na atualidade a questão. A complexidade normativa tributária e o excesso de burocracia não contribuem para que o federalismo cooperativo atenda adequadamente às necessidades dos municípios, aos quais foram atribuídos muitos serviços públicos de atendimento à população, que precisam de recursos financeiros suficientes para ser bem realizados. Como método para o desenvolvimento da pesquisa será aplicado o hipotético-dedutivo, apontando como hipótese a premissa de que nos moldes como vem sendo praticado, o federalismo brasileiro não conduz ao pleno cumprimento dos princípios e objetivos constitucionais. Ao final, concluiu-se que o país precisa rever sua forma de repassar as receitas tributárias, especialmente em relação aos municípios que arcam com encargos desproporcionais ao produto da arrecadação que realizam e aos valores recebidos pelos repasses dos Estados e da União

An Assessment of Impact of GST on India’s Online Retail Sector

The online retail market in India is relatively new and still adapting to the global business environment. Also, conventional tax regime was neither able to cover all e-commerce transactions nor give it a proper space to flourish. The launch of Goods and Services Tax (GST) changed the taxation scenario in India from a very complex tax structure comprising of around 500 different kinds of taxes to a simpler tax regime with just 3 broad tax categories while having both positive and negative impacts on industries operating in organized and unorganized manner. The objective of this exploratory, qualitative, and non-empirical paper is to explore and present the consequences of the introduction of GST on the Indian Economy with special reference to the online retail industry in India. Researchers reviewed the reports of various departments of Government of India (such as the Central Board of Excise and Customs); the GST Council reports up to 30th meeting held on September 28th 2018; Honorable Finance Minister’s speech on GST; and interviews of government officials. This paper may provide useful insights to the online retailers, suppliers and most importantly, the common buyers in understanding the changes brought by GST and help the GST Council in making further amendments in the Act.

Peer Effects in Public Support for Pigouvian Taxation

Despite the efficacy of Pigouvian taxes, governments often find them surprisingly controversial to implement. Evidence suggests the reason may be their complexity, which stems from the delay of externality. This paper studies whether communication among peers can promote public support for Pigouvian taxation. Using a market experiment with time-delayed negative externalities, we find that support for Pigouvian taxation increases when tax supporters can explain their position to other voters. We show that the peer effects cannot be explained by simple imitation or compliance, but are more likely to be driven by social learning. Our findings provide converging evidence for the role of complexity in the lack of support for Pigouvian taxes. These results point to the importance of giving voice and visibility to members of the general public who support efficient but complex tax policies.

Corruption, complexity and tax evasion

Tax evasion is facilitated by corruption, and corruption is facilitated by tax complexity. This article argues and presents evidence that tax systems have become far more complex than they need to be. The growth of public sector operations over the past century was accompanied by higher and more complex taxes, higher public spending, many new government programs, and an increasing involvement by governments in the functioning of the countries’ economies and in the activities of citizens. It has created a great deal of complexity in public sectors, and a fertile field for corruption, tax evasion or tax avoidance, and abuses in some government programs. The more governments relied on tax systems to pursue an increasing number of social and economic objectives, the more complex the tax systems became and the greater were the opportunities created for some taxpayers to get around the system. Complexity also encourages the growing army of lobbyists to push for small tax changes advantageous to their clients, causing tax systems to become increasingly more complex. In addition, it increases the costs of administering tax systems and of complying with the many tax obligations. To what extent tax systems have become fertile for corruption and tax evasion is likely to depend on cultural characteristics of countries among other factors. Globalization has opened new doors and new opportunities for individuals and corporations who operate, or can operate, globally to exploit the new tax-avoiding possibilities created by globalization and a global financial system. Nevertheless, complexity is not inevitable. It could, however, be reduced, as the experience of some countries has shown

Corruption and Tax Structure in American States

We examine the extent to which public corruption influences the tax structure of American states. After controlling for other tax structure influences, we find that states with greater measured public corruption have more complex tax systems, have higher tax burdens, rely more heavily on regressive indirect taxes, and have smaller shares of their tax burdens with initial impact on business. These are significant structural impacts on the tax systems.

Which ‘Source Taxation’ for the Digital Economy?

This article is concerned with source-based approaches to the international tax challenges raised by the digitalization of the economy. It focuses, in particular, on what, in the current debate, is often referred to as a possible set of short-term or interim measures. After introducing the context from a broader socio-historical and business perspective, the article addresses the current complex tax policy agenda, aiming at outlining possible policy models to be derived from the OECD and EU “platforms for proposals”, as well as from selected domestic experiences. In doing so, the article addresses a set of micro-research questions that appeared very relevant to the author in the current climate of uncertainty surrounding the taxation and digitalization agenda. First, the article is concerned with the need to conduct an exposition of terms by introducing some clarifying distinctions against the backdrop of the very blurred lines between the various policy options under consideration. In particular, it attempts to shed light on how a short-term or interim approach could actually be defined and in tracing some boundaries between equalization levies and a withholding tax-based approach. This exercise allows for some possible proposals to be set forth regarding how the concerned measures may be made more easily compliant with the pre-existing international legal framework and more attuned with their inherent policy objectives, also bearing in mind the need to minimize distortions as far as possible. This normative perspective is inherently tied to another set of ‘micro-research questions’ addressing how the policy and legal planes interact in this area and to what extent such initiatives might be pursued in accordance with a coherent set of policy goals in a way that would not prove disruptive for the existing legal framework of reference. In attempting to do so, however, the author realizes that there may be a clear trade-off between the above different sets of concerns, so that the undertaking of any action would need to implicitly express a fundamental option in that regard. Such findings are substantiated against the backdrop of some key unilateral experiences (including regional ones, as per the recent Directive proposal on the common system of a digital service tax) that have so far been enacted or ventilated, assessed in particular in the light of the recently released Interim Report on the Tax Challenges Arising from Digitalization.

Why Examples? Towards More Behaviorally-Intelligent Regulation

Tax regulation authors habitually infuse regulations with explanatory examples. These examples are viewed favorably by both the government that encourages their drafting and the taxpayers who regularly rely on such examples to assist them in dealing with the notoriously complex tax rules. Despite the ubiquity of these examples, there is no published guidance for their drafting, their use, or their interpretation. The first original contribution of this Article is the exposition and classification of the advantages and deficiencies in the current use of examples in tax regulations. This Article is the first to question the rationale behind the ubiquitous use of examples in tax regulations. The Article uses data collected by original surveys of expert tax professionals and government employees involved in drafting tax regulations. The second original contribution of this Article is the explanation of the appeal of these examples among tax experts, and the potential hazards of the examples despite this apparent appeal. This analysis uses insights from behavioral science, and particularly from the study of cognitive biases, to explain, for example, how anchoring via an example could shift the focus of a regulatory rule and alter the boundaries of the law in inappropriate or unfair ways. Relying on this analysis, the Article finally proposes — the third original contribution — a better-informed approach to the writing of examples in tax regulations.

English

This study examines the influence of measures of tax compliance costs on tax compliance behaviour among medium and large corporate taxpayers in Kenya. It uses a Structural Equation Modelling (SEM) technique to establish the key cost drivers built using survey data, while controlling for key attributes of the tax system as well as firm characteristics. The results indicate that tax compliance in Kenya significantly declines with increase in tax compliance costs, particularly those related to understanding of the existing complex tax laws, changes in tax rules as well as general costs of meeting the compliance and regulatory requirements. The model constructs account for about 40% of variations in tax compliance behaviour in Kenya, which is above the empirically accepted minimum for exploratory studies. From the results, the study recommends a focus by tax authority and policymakers on measures to reduce these identified tax compliance costs. In addition, greater emphasis should be put on investing in opportunities that reduce financial pressure on firms thus encouraging tax compliance. Key words: Tax costs, tax compliance behaviour, income tax, corporate taxpayers, Kenya.